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5.
BEST PRACTICES
• Best Practices are defined as techniques
that business units may use to help detect
and avoid problems in the acquisition,
management, and administration of
contracts. Best practices are practical
techniques gained from practical
experience that may be used to improve
the procurement process
5

6.
Procurement Defined
The term “procurement” refers to the
process of acquiring goods, works and
services. The process spans the whole cycle
from identification of needs through to the
end of a services contract or the useful life of
an asset.[1]
[1]
UNDP Fin. Reg. 21.01(a) (March 2005).
6

7.
Changing Business Scene
• Purchasing is a professional activity in transition.
• The function that used to be called purchasing
or procurement has expanded to become Supply
Management.
• Pivotal role brings procurement closer to
strategic planning.
• Emerging role is proactive and more
strategically oriented.
• Move from reactive procurement to Strategic
Supply Management
• From a tactical focus to strategic focus.
7

8.
Strategic Plans & Procurement
• Strategic Plans sets the overall direction for support to
programme countries to achieve national development
objectives.
• UNDP mission is to help countries accelerate progress
on human development. Hence aim of UNDP advocacy,
policy advice and technical support should be real
improvements in people’s lives.
• Dual Roles of UNDP: First pillar upholds the UNDP Role
to coordinate and enhance efficiency and second pillar to
provide advocacy, policy and technical support in poverty
reduction, democratic governance, crisis prevention and
recovery, and environment and sustainable
development.
8

9.
BUSINESS MODEL
• There will be stronger emphasis on
providing knowledge, policy advisory.
• Focus efforts on areas where it has
mandate and comparative advantage.
• Will seek to build more extensive
partnerships with CSOs to scale up the
scope and impact of its work.
• Bring advisory support closer to ground.
• Expand Knowledge networks
9

10.
Guiding Criteria
•
•
•
•
•
•
Contribution to acceleration of MDG
Creation of effective institutions.
Expansion of national and local capacities
Promotion of sustainable development
Support to UN partnerships
Provision of ‘last resort” in case of national
capacity or crisis.
• Withdrawal from specialized sectoral activity,
infrastructure with no capacity building, standalone procurement, small-scale projects without
country wide impact.
10

13.
Procurement & Delivery:
• Delivery comprises mainly of following components:
Goods, Services, Individual Consultants, Travel, etc.
These fall under procurement.
• Procurement is the key pillar of delivery.
• Procurement is presently treated as a mechanical
process.
• One needs different type of skill sets to manage different
type of goods and services.
• One need market and product knowledge. It is not about
3 quotations.
• It is about partnering with supply sources
• Move from tactical to strategic mode ( Presently we
13
spend 100% of our time on fire fighting)

19.
ACP Review Cycle
ACP Secretary prepares the review notes (case
summary) and sends it to the ACP Members by
Monday
Requestor submits the case to ACP
Secretariat by Friday, 3pm EST
1 Day
1 Day
CPO reviews the ACP
recommendations and
Approves/Withholds/ Rejects the
case.
The CPO action is done by
Wednesday.
SECRETARIAT
ACP
MEMBERS
REQUESTOR
2 Days
CPO
Based on the ACP recommendations, the
Chair forwards the case to the CPO for
Approval/ Withholding/ Rejection.
The Chair forwards the case to the CPO by
Monday.
ACP Members review the notes
and prepare for the ACP Meeting
on Wednesday.
ACP Meeting takes place every
Wednesday at 1pm.
1 Day
ACP MEETING
1 Day
1 Day
ACP CHAIR
ACP MEMBERS
ACP Secretary uploads the ACP
recommendations on ACP online
by Thursday.
Notification sent to ACP Members.
1 Day
ACP Review Cycle = 8 Working Days
* Based on the assumption that the Requestor has
provided all the relevant information to facilitate
ACP Review
ACP Members review the
recommendations and they
can add their comments by
Friday.
19 19

24.
AUDIT ISSUES
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Delegation framework
List of all contracts that required a waiver of the competition process.
Procurement plan.
Procedures in place for those country offices that did not submit plans. How many
of them submitted these plans?
Code of conduct for all staff in the procurement office.
Evidence of supplier review to prevent trade with terrorist suppliers.
Minutes of meetings of ACP.
Records of all fraud reported on the fraud system as well as processes in place to
address fraud.
Procedures in place to address green procurement.
Controls implemented to prevent splitting of orders.
Post Facto contracts – goods purchased without orders and delivered, Retroactive
– purchases without orders of contracts and the supplier has not delivered the
goods/services.
Results of training of program staff/statistics.
Expenditure reports for HQ (excluding personnel expenses).
Access to ATLAS.
24

26.
Confusion of Buying vs. Contracting
• What is “Buying”? What is Purchasing? What is
Procurement? What is Contracting?
• When one party is prepared to pay another party
for supply of goods or services, then subject to
conditions, the party enter into a “contract”.
• If the risks involved are low, then contract can be
in the form of PO. However in case of complex
or high value contract, one require detailed
documentation covering rights and obligations of
both parties of the contract.
• Thought procedure for both purchasing and
contracting is same.
26

27.
Procurement Authority:
• The Administrator has delegated oversight and
approval authority to CPO
• The CPO delegates the authority to RR,
Directors and Heads of Bureaus for award of
contract valued at less than $100,000
• Increase of procurement authority can be
delegated by the CPO based on needs and
capacity.
• RR and Directors can sub-delegate the authority
in writing.
• Oversight mechanism is CAP and ACP.
27
• Accountability

34.
Requisition Process Flow
Requisition creation:
Budget check:
- In UNDP any Atlas user can
create an approved
requisition. Therefore, the
documentation of the project
manager’s approval must
take place outside Atlas. This
documentation could take
different forms depending on
the circumstances – for
example, the procurement
plan attached to the project
document or a signed copy of
the purchase requisition.
- In UNDP, commitment
control is implemented
in the PO level. Hence
although a preencumbrance is created
once the budget check is
performed, the actual
budget line will not be
impacted.
Buyers receives duly
approved and budget
checked requisition
through workflow and
proceeds with the
procurement activities.
34

35.
PO Process Flow
PO creation:
-Once all procurement and
contracting process are completed in
accordance with UNDP regulations
and rules buyers will then create a
PO in Atlas.
-Enter AM profile information for
procurement of goods
-If the vendor does not already exist
in the system, users would have to
enter the vendor information and
submit for approval before creating
a PO
PO approval:
Budget check:
- once the PO is
completed, it would
be routed for the
budget owner’s
approval
- once the PO is
approved by the
budget owner, Buyer
would need to
perform budget
check to create
encumbrance in the
system before
dispatching to
vendor.
Dispatch PO
35

36.
Payment Process Flow
Receipt creation:
-Once the goods or
services is received, the
requisitioner will then
create a receipt in the
system.
-Asset Creation:
-Once the receipt is
created back ground
processes will then pick up
any transaction which has
an AM profile and bring it
over to the AM module.
Voucher
creation:
- Once an invoice is
received, the finance
users will then create
a voucher to process
the payment
Budget check:
-In UNDP no
additional approval is
need for PO-vouchers.
-Users need to
perform budget
checks to liquidate the
encumbrance and
create an expense in
the commitment
control.
Matching:
-The matching process is
scheduled and performed
automatically in the backend.
-The matching process validates
information between PO, receipt
and voucher.
Payment
36

38.
Terms of Reference (TOR)
• TOR may be compared to technical specifications for the
purchase of goods or works.
• Areas to be covered are:
• Objective: What is the anticipated result of services.
• Background: What is the history of assignment. Any
constraints.
• Scope of Work: What is the consultant expected to do?
Degree of details. Are there any specific decision points
during the performance of work?
• Purchases: Are any hardware requirements connected
with the assignment? When should such deliveries to the
client be made and on what terms?
• Reports: How and when will the report be presented?
• Contributions: What is the client going to provide in the
38
way of facilities, professional support and physical
facilities?

40.
Tips on writing an effective SOW
• Be clear-use simple, direct language.
• Use active, not passive tenses ( The seller shall
conduct the test as opposed to a test should be
conducted---, language is the dress of thoughts)
• Spell the buyer’s obligation carefully
• Provide a ceiling on the extent of services
• Identify all constraints and limitations
• Include standards that will make performance
measurement possible and meaningful
• In case of goods, focus should be in providing 40
functional and performance specifications

41.
Supply Market Analysis
• This is technique used to identify market characteristics
for specific goods and services that assist in planning.
• It assists the unit to understand as to how the market
operates and where it is heading.
• Is advertising for information good enough?
• Market Structure: How many suppliers? How are they
geographically placed?
• Horizontal and vertical integration.
• Monopoly (cartel like), Oligopoly (2-10), monopolistic
competition and perfect competition.
41

43.
Engaging and Managing
Consultants
• Consultant may be individual or an organization to
provide expert advise.
• Characteristics of a Consultant:
– Engagement for a fixed period at agreed rate
– Does not require day to day supervision.
• Consultancy services, operational consultantsprofessional or non-professional services
• When a consultant is not a consultant?
• Steps: Identify the need, what is required from them?
Select the consultant, Engage and manage the
consultant, evaluate the result and record and report
43

44.
Procurement Strategy
This is the way forward to implement an
overall change programme designed to
place procurement process at the heart
of UNDP activities so that it is able to
contribute effectively to the UNDP’s
mission.
This is the foundation stone of strategic
procurement.
44

45.
Procurement Strategy: Objectives

To ensure that procurement supports UNDP’s principles.

To achieve best value for money on all procured goods,
works and services.

To provide a corporate focus to procurement.

To detail the way forward on reforming and improving the
procurement function.

To encourage long-term thinking and a commitment to
strategic procurement.

To reduce the cost of the procurement process and ensure
continuous improvement

To give due consideration to environmental concerns
(Green Procurement).
45

46.
Objectives







To ensure that risk is appropriately managed.
To promote cooperative arrangements.
To promote the development and use of performance
measures.
To ensure that procurement is undertaken in accordance
with high professional standards and probity.
To develop the scope for doing business electronically (eProcurement)
To develop management information system
To ensure a structured approach to procurement training
and development for staff.
46

47.
Organization
A Center-Led Action Network (CLAN) approach is
suited for an organization with widespread activities
taking place with a high level of local autonomy. In
CLAN, purchasing action stays at the local level but
buyers do not act in isolation.
Center
Connection
Local
47

49.
Relationships
• Procurement can no longer be considered
an isolated function, working at arm’s
length
• it focuses on:
- the relationship with suppliers
- developing Long Term Agreements
- the United Nations Global Market
(UNGM)
- Procurement Marketing (presenting
UNDP as preferred customer)
49

53.
Procurement Planning:
• This should take place well before taking any purchasing
action.
• It should not be limited to specific requisition but part of
positioning the procurement unit to best advantage
• The first task is to establish the significance to the buying
organization of the purchased items and then to gain an
understanding of the market conditions.
• This require the use of following three techniques
– Supply Positioning
– Supplier Preferences
– Vulnerability management
53

54.
Procurement Plan:
• A procurement plan describes which product will be
acquired from vendor as well as when and how they will
be acquired. What, When, How
• Template
– Items to be procured
– Evaluation criteria
– Procurement Method
– Schedule/ Date of delivery
– Ownership rights of the source code
– Ownership rights of the production
• One of the major initiative to improve procurement
54
system

55.
Procurement Planning
Procurement planning, prior to any action taken in Atlas, is essential
for the timely solicitation of quotations, bids or proposals; the
award of contracts; and the delivery of inputs. Procurement
planning entails more than the selection of a procurement method
for various goods, works and services and when to schedule
activities, but combines the legal and institutional frameworks in
which procurement must be carried out. Business Units should
consider the following:
Requisitions;

Delivery time and place;

Evaluation criteria;
Justification for noncompetitive procurement;
and
Review of CAP and ACP.

Types of goods, works or
services required;

Method of procurement;
potential sources;
Estimated costs;
Source of funds;

55

57.
False Assumptions
•
•
•
•
Any one can Buy
Price is always related to cost
Price is always related to volume
Buyer power increases with the size of the
organization
• Price list are set in stone
• Negotiations downwards endangers service and
quality
• Sealed bidding is the most secure method
57

58.
Supply Positioning (Portfolio Analysis):
Supply Positioning provides a mechanism for
discriminating between the components of the total
purchasing requirements whether goods, works or
services, and a tool for developing specific
strategies to meet the needs of the organization
with respect to each group of purchases.
58

62.
Long Term Arrangement:
– LTA offer a number of advantages:
– they offer the value for money advantages of
centralized procurement without the commonly
associated level of bureaucracy
– a single tendering exercise over the life of the
arrangement reduces administrative effort and cost
for the Department
– the initial tendering process will have identified
competitive suppliers, who should then offer more
competitive prices on the basis of the expected value
of business
– quality assurance and legal requirements will have
been dealt with at the outset
62
– Completion Report

63.
Long Term Arrangements:
– call-offs are covered by UNDP Standard Terms and Conditions
combined with special terms and conditions appropriate to the
items being procured and will, in general, provide better
protection than individual small purchases under the supplier's
standard conditions
– the agreed range of items or services should be at short notice
thus reducing or avoiding stock holding for goods and reducing
down-time on equipment maintenance and repairs
– the supplier benefits in terms of planning stock levels and
continuity of supply
– a mutually beneficial longer-term working relationship can be
established with suppliers
– Call-off create legal obligation and not LTA
63

69.
Common Reasons for Rejection
 Failure to undertake a competitive exercise
 TOR or Statement of Works or Specifications
incomplete
 TOR or Statement of Works or Specifications
too restrictive or biased
 Incorrect evaluation methodology or criteria
 Failure to submit requested documentation for
ACP review
 Conflict of interest
 Value for money not obtained
 Incorrect procurement method used
 Incorrect shipping terms cited
 Cost Matrix not provided
 No information about the software, as to
number of licenses, who will maintain etc.
69

70.
Action Plan
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Translation of all documents to Spanish
Implementation of e-Procurement
Use of Reverse Auction
Ensure the implementation of Specification Templates
Implementation of CAP Online
More interaction among procurement practitioners on the region
Training of CAP and RACP members
Increased certification
Develop Long Term Arrangements
Work closely with Government to develop LTAs.
Use each other country office if others are better in some field of
procurement.
Strengthen Contract management
Profiling of office in line with practice areas
Requisition is a must.
70

75.
Common Reasons for Rejection
 Failure to undertake a competitive exercise
 TOR or Statement of Works or Specifications
incomplete
 TOR or Statement of Works or Specifications
too restrictive or biased
 Incorrect evaluation methodology or criteria
 Failure to submit requested documentation for
ACP review
 Conflict of interest
 Value for money not obtained
 Incorrect procurement method used
 Incorrect shipping terms cited
 Cost Matrix not provided
 No information about the software, as to
number of licenses, who will maintain etc.
75

77.
Procurement Methods
• Request for Quotation (RFQ)


most flexible and least formal
contract amount exceeds USD $2,500 but less than USD $100,000.
• Invitation to Bid (ITB)


normally used when entity is not required to propose technical approaches to a
project activity (i.e., goods and civil works)
contract amount is USD $100,000 or more.
• Request for Proposal (RFP)


used in the procurement of complex goods (e.g., functional specifications cannot
be expressed) and services
recommended for all contracts exceeding USD $100,000.
• Direct Contracting




value of procurement is less than USD $2,500
there is no competitive marketplace for the requirement
There is a Long Term Agreement (LTA)
there is genuine exigency for the requirement.
Purchasing Card
77

79.
Purchasing a service:
• Services are more difficult to evaluate than goods.
Goods have objective standards
• Supplier of services are often reluctant to provide
benchmark
• Excellent services are easy to monitor but mediocre or
poor services are difficult to evaluate.
• Goods can be returned whereas services cannot
• Poor quality services may continue undetected and
cause greater problems
• Because of above differences the reputation and the
experience of supplier is more important
• Key purchasing criteria: Reputation, References,
Experience, Current Clients, Equipment, price etc.
79

80.
Purchasing Services:
• Many services such as secretarial and cleaning are often
bought as generics. Other services such as application
software development , advertising are bought as
professional.
• Purchasing is not involved fully in procurement of
services
• Word of mouth is the one of the key ways in which
buyers of services exchange information.
• There are five roles, Users, Buyers, Influencers,
Deciders, gatekeepers
• Market Research, pre-qualification of suppliers
• Interviewing the companies and asking them to make
80
presentation for better clarification before technical
evaluation.

81.
Why an RFP?
• In competitive contracting, there are two
methods : ITB or a RFP.
• ITB is used when goods or service is well
defined and can be specified in detail.
Selection solely on the basis of cost.
• RFP is a negotiated procurement process
and provides flexibility to the contractor
and the company.
81

82.
Designing an Effective RFP:
“Never tell people how to do
things. Tell them what you want
to achieve and they will surprise
you with their Ingenuity”
82

83.
RFP: Introduction
• Tool to promote competition for procurement of services.
• A vehicle that allows both buyer and supplier to establish
a dialogue and to work from same set of rules.
• RFP should encourage creative thinking by suppliers
• A successful RFP process require that it has clear
technical requirements, project budget, implementation
and project management details.
• Use RFI if you wish to validate technology and
requirements.
• If you don’t know where you are going, any road will get
you there.
• Allow time for an independent review of the RFP.
• Only qualified suppliers should participate in the RFP
83

84.
Basic Elements of an RFP:
• Statement of Purpose: the nature of the
services to be provided and the overall
objectives of the contract.
• Background Information: Overview of the
program, statistics, existing facilities, an
honest accounting of current problems
and strengths.
• Service Specification: Sets out in specific
and measurable terms the services
84
required,

85.
Basic Elements of an RFP:
How they are to be delivered and the
duration they are required.
• Performance Standards: Minimum
performance standards and method of
monitoring
• Instructions to the Offerors
• General Terms and Conditions
• Special Terms and Conditions
• Evaluation and award process
85

86.
Basic Elements of an RFP:
How they are to be delivered and the
duration they are required.
• Performance Standards: Minimum
performance standards and method of
monitoring
• Instructions to the Offerors
• General Terms and Conditions
• Special Terms and Conditions
• Evaluation and award process
86

89.
Evaluation Factors:
• Key Considerations: Management,
Technical and Financial
• Analysis:
– What things should be evaluated
– What are their attributes
– Which attributes are relevent
– What is their relative importance
Best Value: Value of a proposal is the sum of
the weighted values of the applicable
evaluation factors for award.
89

91.
Best Practices: RFP
•
•
•
•
A Requirement states a need and is measurable.
Requirements must be meaningful
Requirements must not include the solution
Requirements shall not be combined that may restrict
competition.
• Pricing should be broken down into individual
components and tasks.
• “ Shall” indicates a requirement and hence no exception.
“Will” is used to denote the statements of intent. “Should”
is used to describe project goals
91

92.
Best Value for Money:
To get the best value for money, you must
consider costs that the buyer will incur in
addition to the Offeror’s price, including:
• Cost to administer the contract
• Life-cycle cost of the product
• Quality of the product
• Past performance of the supplier
92

93.
Evaluation Team: RFP
• Evaluation team shall be of 3-5 persons
and a Chairperson
• Evaluation team is normally the one who
wrote RFP. The specialists may be used
to evaluate particular section.
• Attention to details to grasp the difference
between proposals
• Should not be handled as a consensus
method.
93

94.
RFP: Decisional Rules
• Lowest Priced technically acceptable
– Technical factors are used to qualify offerors
– An offer is either acceptable or not
– Price is the only factor for decision
• Best Value:
– Define the factors that contribute to value
– Relative Importance of each
– How to measure the value of individual factor
performances
94

95.
Contracting Do’s & Don’ts
• SOW
– Incorporate the SOW as an addendum
– It should state expectation in terms of quality,
performance, delivery and so on
– This is accurate representation of deliverables
• Keep it Simple: Should stay away from attempts to draft
legalese. Leave it to legal department
• Post Contract Processes
• Online Contracting
– Take advantage of online contracting for low value
procurement
95
– Don’t forget to check T&C

96.
Global Fund Procurement:
•
•
•
•
•
•
•
Procurement forms nearly 80% of the project amount.
Focus is on HIV/AIDS, Malaria and TB
UNDP is involved in 28 countries as PR and for support services in
5 countries
Total project amount is nearly $650 m but annual delivery is nearly
$200 m.
OLPS has one full time Procurement Advisor working very closely
with the country offices and major suppliers.
Major suppliers are IDA, Mission Pharma, CIPLA, UNICEF, UNFPA,
IAPSO etc. UNDP has LTA with them.
OLPS Procurement Advisor is focusing on assisting the country
office to improve delivery, help them in transferring knowledge to the
counterpart, help them build supply chain.
96

98.
Execution Modality:
• DEX: Under this we treat all vendors and
NGOS as contractors
• NEX: Ensure that procurement rules
complies with the best international
practices.
• Country Office Support to NEX. (Follow
UNDP Guidelines)
• NGO Execution
• UN Agency Execution
98

99.
Asset Management:
•
•
•
•
•
•
•
What is asset?
Types of assets: Capital and non-capital
Profiles of assets
Who can add/ retire assets?
Theft and loss of assets
Tracking of assets
Assets for management and development
project
• Major concerns of external auditors
• Disposal: Clearance by CAP/ACP
99

100.
Contracting Do’s & Don’ts:
• Risk Assessment
– Be aware that each contract has a finite amount of
risks that is acceptable
– Focus should be shift as much risk to supplier
– Don’t use the supplier terms and conditions
• Contract Methodology
– Determine the contract type that mitigates risks
– Don’t overlook the importance of TOR
• Contract Execution
– Include your T&C in RFQ, ITB & RFP
– Have the supplier sign and return the RFP as a pre100
requisite for being awarded business.

101.
Practical Tips:
• Procurement must be framed with clear and accurate
clients requirements and appropriate evaluation process.
• If there is one thing you have to get right, it is evaluation
methodology. Once its is put out, you have crossed the
rubicon.
• Purchasers must be scrupulous in ensuring fairness of
the process, even if it means issuing an addendum or
clarification to all vendors.
• Bid closing time is the closing time-being late means
automatic disqualification.
• Vendor must be legal and viable business entity
• Evaluation team should comprise of multidepartment 101
team –no conflict of interest

102.
Practical Tips:
•
•
•
•
•
•
•
Hard work at the start pays off for both buyer and seller
While developing specifications, determine if the requirement is a
mandatory requirement i.e. must meet for consideration of offer.
Benchmark the each specific requirement. Suppose you give 10
marks to a point, what benchmark the vendor will have to meet.
Purchaser should act as a non-voting member to give guidance on
procedural matters.
Purchaser will invite end users and other knowledgeable persons to
participate
Evaluation panel should comprise of either 3 or 5 members.
Best value concept (Combined Scoring Concept)
102

106.
Performance Security
•
•
•
•
•
•
•
•
Required to ensure compliance with contract requirements
Buyer require some form of performance guarantee
Performance Bond: Irrevocable and unconditional type. A
performance bond is issued by a surety or bonding company. Legal
terms of bond are more complicated but have the same effect as a
bank guarantee.
Letter of Credit: A confirmed, Irrevocable standby letter of credit may
be used as an alternative.
Performance security are limited to percentage of the value of the
contract.
Performance Security should not be the only remedies for breach
The remedies may be cancellation, Liquidated Damages ( To cover
late delivery)
Retention Clause
106

108.
Bill of Lading:
•
•
•
•
•
•
This can be likened to transferable cloakroom tickets
They acknowledge receipt of goods in a certain conditions
This is a document of title
A clean bill of lading states that goods are received in good
conditions
The document covering the carriage of goods by sea is called B/L
It covers:
– Beneficiary
– Port of shipment and destination
– Marking and number of boxes
– Weight and dimensions
– Whether freight is pre-paid
“Receiving of Goods-Received but contents unchecked”
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109.
Third Party Inspection
• Carried out to ensure that goods conform to standards
and specifications of the purchase contract.
• Inspection can be carried out during manufacture, at the
pre-shipment and post shipment stage and/or after
arrival/installation at the site.
• Cost of inspection varies from 1-2% depending on scope
• Legal liability is very limited
• Inspection before shipment is suitable for
–
–
–
–
Where goods are procured from a distant source
Where transportation costs are significant factor
Where the return of rejected goods would be impracticable.
Where inspection at the point of destination would be
unsatisfactory.
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110.
Freight Forwarding
• Shipping term determine the involvement of buyer in
arranging transportation, and their port and custom
clearance.
• To arrange transportation, it is necessary to know:
– What modes of transport techniques are available
– What services are available and are appropriate
– What are the current and prospective freight rates
– What documentation is involved
– What are the risks and to what extent carriers will
indemnify for loss and under what circumstances.
• Buyers often this knowledge and turn to freight
forwarders
• They have knowledge of port, custom rules
• They work on commission basis. They also receive
commission from the carrier.
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111.
Cargo Insurance:
• Protection against financial losses resulting from
damages, fire, war, strikes, pilferage and theft, breakage,
non-receipt of entire or part of consignment and damage
suffered by goods during transit and declared general
average.
• Coverage should cover cost of goods+ Freight+ 10% to
cover admin cost.
• Duration of coverage (Pre-shipment and post shipment)
• Insurance during storage
• Blanket Policy of UNDP ( Rate 0.24%)
• Claim Procedure
• Does it cover when goods are in transit over land or on
its own wheel
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113.
Risk Management
• Risk is part of the procurement environment
• It involves systematic identification,
analysis, treatment and where appropriate
accepting the risks
• Agreements to limit a supplier’s liability to
UNDP and third party (Indemnity.
Guarantee, warranty)
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127.
Ethics, Probity & Accountability
• Public funds and hence require more than usual public
scrutiny.
• Probity means integrity, uprightness and honesty.
• Transparency and accountability gives confidence to
suppliers to participate.
• Ethics are moral values that guide the procurement
persons in their tasks.
• Ethical behavior cover the concept of honesty, integrity,
probity, fairness. Avoiding conflict of interest etc.
• Check list:
– Is the action legal?
– Can I justify it?
– What would happen if action is publicly scrutinized?
– Do I think that it is right thing to do?
127

128.
Procurement Accountability:
• Definition: The accountability in procurement
means that staff is responsible for actions and
decisions that they take in relation to
procurement and for the resulting outcomes.
The staff is accountable through established
lines of accountability.
• How does accountability help? The
accountability encourages the efficient, effective
and ethical use of the organizational resources.
This is the main watchword for UNDP
procurement process.
• Fundamental elements of Accountability: 128

129.
Accountability:
– Procurement Policy:
– Documentation: It is important and provides record
of procurement activities. This need to be
strengthened.
– Disclosure: Annual procurement plan must be
published to provide confidence.
– Notification: The revised procurement plan calls for
publishing all major procurement notices and award
of the contract. This is being followed to a limited
scale.
– Dealing with complaints: The procurement protest
procedures
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130.
Why focus on Ethics?
• Increased business volume=>higher
pressure
• Added Scrutiny (Due to recent cases of
misconduct)
• A breach of ethics affects credibility, which
is difficult to recuperate.
• Impropriety can harm the reputation of the
organization
130

131.
Definition of Ethics
• Ethics is the discipline related to the issue
of right and wrong, moral duty and
obligation, moral principles and values,
and to moral character.
• Ethics: Greek word “ethos’…implies
character and customary behaviour.
• Morality: Latin word “mores’…refers to
social customs.
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133.
Procurement Ethics:
•
•
Conflict of interest: A conflict of interest may exist when a staff is
involved in an activity or has a personal interest that might interfere
the objectivity in performing the function. (Code to guide
relationship) It can arise:
– When an staff takes outside employment or has financial interest
– When personal relationship with staff of other business entity
could influence the decision.
Gifts and Gratuities:
– May not accept gifts or gratuities from any supplier for
themselves or for their family
– May not take advantage of their position to seek discounts on
procurement for personal use. This is construed as a gratuity
– May accept advertising novelties.
133

136.
Fraud vs. Corruption
• Fraud is defined as “dishonestly obtaining a
benefit by deception or other means” and
includes both tangible and intangible benefits.
• Fraud means the intentional , false
representation or concealment of facts for the
purpose of inducing another.
• Corruption means the practice of offering, giving,
receiving directly or indirectly of value to
influence the action of procurement staff.
136

138.
Contract Administration:
• Def.: Those activities and actions taken by the buyer and
supplier during the time from contract award to contract
closeout. They may include follow up, expediting and
supplier management function.
• Issues to be addressed: Inspection procedures,
penalties for non-conformance, Payments, rejection,
termination, debriefing, procurement protests, PO
closing in Atlas, claims for losses, consultants charging
billable hours without measurement of progress, new
person being assigned, substitution of products etc.
• Step One: Ensure that there is a designated contract
administrator
• Step 2: Define the duties of the contract administrator 138
and assist in developing contract administration plan

141.
Advisory Committee on Procurement
• Established by CPO to oversee major contracts
• Review contracts which involve commitments to a
supplier with respect to a single requisition or series of
req in a calendar year valued at $100,000 or more
• Proposed contracts which generate income of $10,000
• Any amendment of a contract previously reviewed by
ACP where the contract amendment or a series of
amendments either increases the total amount by 20%
or $100,000 whichever is less.
• Any amendment not previously submitted to the ACP
where the revised total contract amount exceeds
$100,000.
141

142.
ACP:
• Proposed contract that leads to series of
contracts amounting more than $100,000.
• Disposal, Write-off or transfer of goods
with asset value $30,000 or more
• All vehicle accidents or losses when gross
negligence is the cause.
• Procurement of services related to
individual consultants with contract
amount exceeding $100,000.
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145.
Key Observations:
• SOW/TOR not clear, Biased/ Inadequate specification or
specific requirements or brand names
• Evaluation Criteria does not cover all the deliverables
and do not provide sufficient weight as per their
importance
• Wrong Procurement Methodology
• Use of NGOs for procurement
• Advance Payment on the very high side
• Process too mechanical, Market research missing
• Insufficient number of responses
• Evaluation of Offers not done well
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146.
Oversight at a Glance:
•
•
•
•
•
•
•
•
Number of cases from RBLAC: 265
Number of cases from RBAP: 236
Number of cases from RBA: 205
Number of cases from RBEC: 75
Number of cases from RBAS: 89
Number of cases from HQ units: 138
Number of cases withheld for approval: 31%
Number of cases if “subject to” is included:
Nearly 55%
146

147.
Procurement certification
•
•
•
•
•
•
•
Course has been designed in-house by OLPS
Addresses basic procurement policy and standard Atlas
Procedures.
Objective: 1.Enhance learners’ comprehension of UNDP
procurement policy and processes 2. Increase the level of
competence utilizing the Atlas Applications.
Target group is “Buyer”
Online programme ( 6 hrs for online course and 2 hours for the
exam.)
Course managed by LRC
Status:
–
–
–
–
Number of people enrolled:731
Number of people who have passed simulated assessment: 345
Number who took official assessment: 321
Number who passed: 220
147

149.
Procurement Process:
• Planning is not an analysis but identifying the activities
and direction of activities
• Formalization phase determine the sourcing approach,
evaluation criteria and solicitation documents. It
formalizes the requirement based on budget
• Implementation covers all functions that pertain to the
acquisition, including description of requirements,
selection and solicitation of sources, preparation and
award of contracts, and all phases of contract
administration. It may also include logistics.
• Final phase consists of audit, evaluation and feedback
149

158.
SSA Guidelines
• Tool to hire individual contractors
• SSA shall not be used for staff function.
• As for LTA with companies, individual contractor can be
hired up to 3 years( Max.)
• Sourcing of individual contractor will be based on
competitive process.
• Selection is based on firstly evaluating technically and
then financially.
• Payment is based on number of days/ hours worked.
• Procurement process and not a HR process.
• SSA contractor is covered for Appendix D in defined
terms
• There are indicators to decide the consulting fee.
158

159.
Procuring Services:
• Contract Companies:
– When companies are contracted, they provide
individuals as agreed.
– The company is responsible fpr performance
– There are defined deliverables and the time frame
– There is defined price
• Contract Individuals:
–
–
–
–
UNDP takes the responsibility of completion.
There are defined deliverables.
Contractor is paid based on T&M basis.
Should not be used for staff functions
159

160.
Individual Contractors:
• When to Hire: Assignments that don’t require
teams of personnel and no professional support
of the office is required. In addition the
experience and qualifications of the individual
are of paramount importance.
• When coordination, administration or collective
responsibility become difficult due to high
number, it is advisable to go for contracting the
firm.
• The overall responsibility is with the hiring
organization i.e.UNDP.
160

162.
What is e-Procurement?
• e-Procurement is trade of goods and
services through the internet using a
secured ecommerce platform. It brings
together buyers and suppliers
electronically, enabling both parties to
reduce costs through improved processes.
162

164.
Existing Limitation:
• Requisition is not very intuitive and user friendly.
• Detailed specifications and TOR can’t be
attached at the REQ level.
• It does not encourage the use of catalogues
developed based on competitive process.
• Procurement through purchasing card is not part
of the existing PO module.
• It is difficult to assess the status of the REQ.
164

165.
How will I purchase?
•
•
•
•
•
•
•
•
After being given access to the e-procurement module, you will
create online requisition
You will be directed to approved supplier catalogue if available. If
not you will still complete online request as a special request.
After you enter and submit a REQ, you can route it for approval via
workflow
Approved REQ are then sourced to a PO and dispatched
electronically to the vendor.
Vendor fulfills the order by shipping the requested items to the
delivery address.
The requester will verify the receipt of goods and services
Vendor electronically forwards the invoice including the GRN which
is validated within the system.
Once matched, payment will be automatically made.
165